Simple Interest

Simple Interest

I=prt Application

Simple Interest Formula (I=prt)

• I - interest

• p - principal

• r - rate

• t - time in years

What does that mean?

The interest is the amount that the original amount has grown.

The principal is the original amount invested. (always in dollars)

The rate is the percent amount. (always written as decimal)

The time is the term for the investment. (always in years)

Multiple Choice

What does the I in the interest formula stand for?

• installment

• investment

• interest

Multiple Choice

What does the p in the interest formula stand for?

• principal

• payment

• percentage

Multiple Choice

What does the r in the interest formula stand for?

• repayment

• rate

• ratio

Multiple Choice

What does the t in the interest formula stand for?

• time

• taxes

• triathlon

To find the interest on an amount of money (principal), you plug in the information from the problem.

Multiple Choice

Danielle borrows $2,500 from the bank at a 6% interest rate for 5 years. What is the equation to find her simple interest?

• I = 2,500 x 6 x 5

• I = 2,500 x 0.6 x 5

• I = 2,500 x 0.06 x 5

Multiple Choice

Danielle borrows $2,500 from the bank at a 6% interest rate for 5 years. How much interest did her investment gain?

• $750

• $7,500

• $75,000

Multiple Choice

Danielle borrows $2,500 from the bank at a 6% interest rate for 5 years. What is her new total after 5 years?

• $750

• $3,250

• $10,000

If your time amount is in months, you have to divide by 12 to get the equivalent time in years.

Multiple Choice

Jude takes out a loan for $10,500 with a 7% interest rate for 36 months.

How long in years is his commitment?

• 2 years

• 3 years

• 5 years

Multiple Choice

Jude takes out a loan for $10,500 with a 7% interest rate for 36 months.

What is the equation to find his simple interest?

• I = 10,500 x 7 x 3

• I = 10,500 x 0.7 x 3

• I = 10,500 x 0.07 x 3

Multiple Choice

Jude takes out a loan for $10,500 with a 7% interest rate for 36 months.

What is the total amount of interest paid with the loan?

• $2,205

• $22,050

• $220,500

Multiple Choice

Jude takes out a loan for $10,500 with a 7% interest rate for 36 months.

What is the total amount that he has to pay back?

• $10,500

• $12,930

• $12,705